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Gravita India Limited Q1 FY25 Earnings Conference Call Summary
Key Financial Highlights • Revenue Growth: 29% increase to INR 908 crores. • Adjusted EBITDA: 33% rise to INR 91.24 crores. • Operational Income: INR 3.57 crores; INR 3.3 crores as non-operational income. • Employee Costs: 9% year-on-year increase; 60% quarter-on-quarter rise due to annual incentives.
Strategic Initiatives • Sustainability Focus: Emphasis on non-lead business and renewable energy. • Acquisition of Price Contracts: Ensures stable margins despite market fluctuations. • Closure of Non-Operational Subsidiaries: In Jamaica and Costa Rica, no impact on future plans.
Future Projects • Lithium-Ion Battery Recycling: Pilot project focusing on technology acquisition and partnerships. • Rubber Recycling Plant: Expected operational by H1 FY '26 with a capex of over INR 600 crores. • Capex for FY '25: Estimated at INR 180 crores.
Growth Projections • PAT Growth: Projected 35% CAGR until FY '28, reaching INR 750-800 crores. • Volume Growth Target: 25% CAGR over three years.
Operational Insights • Capacity Utilization: Current levels at 70-75%, with peak expected at 75-80%. • Scrap Procurement: 42% domestic scrap, with a year-on-year increase of over 50%. • Working Capital Cycle: Target to reduce from 80-85 days to 65-70 days in three years.
Market Dynamics • Aluminum Sector Growth: Anticipated increase in shipments to India. • Challenges in Recycling: Inconsistent scrap supply affecting capacity utilization. • Regulatory Changes: Expected to shift towards more organized recycling.
Conclusion • Management's Outlook: Positive growth trajectory with strategic focus on sustainability and operational efficiency. • Investor Engagement: Encouragement for further inquiries through the Investor Relations team.
Gravita India Limited Earnings Conference Call Summary
Submission and Participants • Date of Submission: May 4, 2024 • Earnings Call Date: May 2, 2024 • Participants: • CEO: Yogesh Malhotra • Executive Directors: Vijay Pareek, Naveen Prakash Sharma • CFO: Sunil Kansal • Moderator: Manish Mahawar (Antique Stockbroking)
Key Highlights • Performance: • Record revenue, EBITDA, and PAT achieved despite logistical challenges. • 29% increase in total capacity and 14% rise in sales volumes for Q4 FY24. • FY24 revenue growth of 13% to Rs. 3,161 crores; PAT increased by 19% to Rs. 239 crores.
• Operational Updates: • Empanelment of pure lead for MCX lead futures. • Expansion of battery recycling capacity in Tanzania. • Declaration of interim dividend.
Strategic Focus • Sustainable Growth: • Commitment to ESG roadmap with ambitious targets for 2028. • Shift from Vision 2027 to Vision 2028 for enhanced ESG goals and non-lead business targets.
• Capacity Utilization Plans: • Targeting 65-70% capacity utilization for ADC12 operations by FY’25. • Addressing logistic challenges by diverting volumes to other geographies.
Financial Insights • Working Capital: • Increase attributed to cheaper international scrap and temporary rise in receivables.
• Taxation: • Clarification on low tax rates in India due to 100% tax exemption in Chittoor.
Regulatory Environment • BWMR Regulations: • Organized sector's share increased to 40% due to new regulations and EPR implementation. • Anticipation of penalties for noncompliance to drive growth.
Market Outlook • EBITDA Margins: • Expected sustainable margins of 9% to 10% moving forward. • Projected top-line growth of 20% to 30% for upcoming quarters.
• Aluminum Business: • Anticipated volume growth of 60% to 70% compared to the previous year.
Future Developments • New Divisions: • Launch of paper and steel divisions expected in FY26 and FY27. • Focus on expanding rubber operations and establishing a lithium-ion plant in India.
• Capital Expenditure: • Delays in new verticals due to market conditions; future investments planned once conditions stabilize.
Conclusion • Management expressed confidence in growth and invited further questions through their Investor Relations team.
Gravita India Limited Earnings Conference Call Summary (January 24, 2024)
Company Performance Highlights • Revenue Growth: 12% increase in consolidated revenue to INR 2,297 crores for nine months. • Profit After Tax (PAT): 24% rise to INR 170 crores. • Q3 Challenges: 2% revenue drop due to logistics disruptions; adjusted EBITDA rose by 26% year-on-year. • Capacity Expansion: Plans to increase capacity to 4.25 lakh metric tons per annum by FY26 with a capex of INR 600 crores. • Sustainable Growth Commitment: Focus on diversifying business verticals and increasing value-added products.
Logistics and Operational Challenges • Impact of Red Sea Disruptions: Expected revenue impact of INR 100 to 120 crores due to reduced dispatches. • Operating Profit: Currently higher at INR 23 per kg due to lower volumes; expected normalization to INR 18-19 per kg. • Alternative Routes: Exploring new routes to Europe despite higher freight costs.
Raw Material Pricing and Profitability • Logistics Costs: Rising costs affecting raw material pricing; local sourcing may lower prices in the long run. • Aluminum Pricing: Decline in EBITDA per metric ton due to price fluctuations; recovery expected next quarter. • Hedging Solutions: Exploring options for aluminum alloys to stabilize pricing.
Future Growth and Projects • Lithium-Ion Recycling: Actively pursuing pilot projects and technological opportunities. • Capex Plans: INR 78 crores spent in FY24; focus on lithium-ion and paper recycling. • Revenue Growth Projections: Targeting 35% CAGR over the next three years.
Operational Updates • Oman Plant: 50% joint venture awaiting environmental clearances; expected operational by Q1/Q2 next year. • Domestic Sourcing: Currently at 36%; non-lead business contributes 12-13% of total sales, with a target of over 25%. • International Sales: Account for 45% of total revenue.
Conclusion • Management Optimism: Despite challenges, management remains positive about recovery and future growth. • Investor Engagement: Call concluded with an invitation for further inquiries to the Investor Relations team.
Gravita India Limited Earnings Conference Call Summary (November 3, 2023)
Key Highlights • Financial Performance • H1 FY2024 consolidated revenue increased by 22% to ₹1,540 crores. • Profit after tax rose by 26%. • Challenges noted in aluminum and plastic volumes due to market volatility, especially in China.
• Operational Updates • Credit ratings upgraded. • Battery recycling operations commenced in Togo. • Significant capacity expansion plans announced.
Management Insights • CEO Yogesh Malhotra's Remarks • Impact of Karago plant shutdown resulted in a loss of ~1,000 tonnes of plastic per quarter. • Existing plants performing well; positive developments in rubber vertical with new capacities in Ghana and Tanzania. • Plans for a lithium-ion battery recycling plant in Mundra and expansion into paper production in Central America.
• Financial Strategy • Long-term debt increased due to loans for overseas operations. • Higher receivables attributed to increased dispatch volumes at quarter-end. • Customs appeal position clarified; potential liabilities mitigated by tax credits.
Market and Growth Projections • Hedging and Market Dynamics • Hedging mechanisms for lithium-ion batteries still developing. • Lead market share currently small, but opportunities in lithium battery recycling anticipated. • Global procurement strategy in place for raw materials.
• Revenue Growth Expectations • Projected growth of ~22% in H1 FY2024, with a long-term target of 25%. • Focus on PAT growth of 30-35% and minimum return on capital of 25%.
Capital Expenditure and Sourcing • Capex Plans • ₹54 crores spent in H1, with a planned ₹205 crores for FY2024. • Capex primarily for existing verticals; some projects may be postponed.
• Sourcing Strategy • Decline in domestic sourcing for battery scrap due to price arbitrage favoring imports. • 40% increase in battery procurement in India compared to the previous year.
Market Share Insights • Lead Recycling Market Share • Gravita holds 15-17% share in organized Indian market; over 50% in certain African countries. • Organized market in India constitutes 30-35% of total market; minimal organized sector for plastics.
Conclusion • Strategic Positioning • Emphasis on growth opportunities in energy storage and telecom sectors. • Aim for revenue CAGR of over 25% and profitability growth of 35% by 2027. • Conference Call Closure • Participants thanked for attendance; call concluded.
Earnings Call Details • Date: July 25, 2023 • Participants: CEO Mr. Yogesh Malhotra, CFO Mr. Sunil Kansal, hosted by Emkay Global Financial Services. • Transcript Availability: On the company's website. • Communication Signed By: Nitin Gupta, Company Secretary.
Company Performance Highlights • Strong Performance: Emphasis on strategic developments and project updates. • Milestone Achievements: • Pure Lead products approved for MCX futures contract. • Expanded battery recycling capacity in Chittoor by 26,440 metric tonnes per annum. • Financial Results: • Consolidated revenue increased by 21% to INR 703 crores. • Adjusted EBITDA rose by 24%. • Standalone revenue up by 6% with a PAT growth of 136% year-on-year.
Strategic Focus • Vision 2027: Commitment to diversification and operational efficiency. • Capacity Expansion Goals: Targeting 4.25 lakh metric tonnes by FY '26.
Scrap Collection and Recycling Processes • Collection Channels: • Nationwide contract with Amara Raja Batteries. • Partnerships with Producer Responsibility Organizations (PROs). • Contracts with IT companies and large corporations. • Extended Producer Responsibility (EPR): Producers responsible for battery collection and recycling.
Market Dynamics and Financial Strategies • Volatility in Margins: Affected by market price fluctuations; exploring hedging mechanisms. • Capacity Expansion Plans: Significant increases expected in lead, aluminum, and plastic by FY 2026. • Debt Management: Maintaining a debt-to-equity ratio below 0.75 and net debt-to-EBITDA ratio of 1.5.
Future Projects and Developments • New Projects: • Battery recycling plant in Oman expected to be operational within a year. • Paper and plastic recycling plant in the Dominican Republic under evaluation. • Operational Challenges: Acknowledgment of disruptions from the Biparjoy cyclone and new plant start-ups.
Revenue Growth and Taxation • Revenue Growth Targets: 25% volume growth from existing verticals; incremental revenue from new verticals. • Tax Rate Increase: Higher profitability in Indian operations leading to a higher tax rate.
Market Position and Competition • Unique Market Position: Few competitors in developing countries offering integrated turnkey solutions. • Client Base: Balanced sourcing from various institutional clients, including significant contributions from TCS and Tata group.
Regulatory Environment • E-Waste Management Regulations: Emphasis on Extended Producer Responsibility (EPR) for lifecycle management of products.
Conclusion • Optimism for Future: Management expressed confidence in achieving growth and profitability targets in the recycling industry.
Gravita India Limited Earnings Conference Call Summary
Key Highlights • Date of Call: May 3, 2023 • Revenue Growth: • Q4 revenue increased by 12% YoY to Rs. 749 crore. • FY'23 revenue rose by 26% to Rs. 2,801 crore. • Profit After Tax (PAT): • Q4 PAT grew by 40% to Rs. 65 crore.
Notable Developments • ESG Loan: Secured a €34 million loan for the Netherlands subsidiary. • New Projects: • Battery recycling plant in Oman. • Expansion in lead and aluminum recycling capacities.
Future Growth Plans • Volume Growth Target: 25% YoY for FY'24 and FY'25. • CAPEX Plans: • Total of Rs. 600 crore, with 60% in India and 40% overseas. • 80-90% of new vertical CAPEX outside India.
Financial Strategy • Cost of Debt: Expected to decrease from 8.5% to 6.5%. • Return on Capital: Targeting at least 25%. • EBITDA Growth: Projected 35% annual growth.
Capital Expenditure and Funding • Funding Sources: Primarily through internal accruals, with Rs. 200-300 crore in additional debt. • Debt Strategy: Current leverage at 1, with a maximum comfortable limit of 1.2.
Market Expansion and New Verticals • New Recycling Verticals: Exploring rubber, steel, paper, and lithium-ion recycling. • EPR Policies: Potential in fulfilling Extended Producer Responsibility targets for the paint industry.
Challenges and Considerations • Raw Material Availability: Critical for establishing new plants. • Competition: Competing with unorganized e-waste recycling sector in India.
Volume and Profitability Insights • Volume Growth Expectation: Approximately 25% YoY, with potential fluctuations. • Profitability Focus: Prioritizing profitability may lead to volume volatility.
Rubber Recycling Capacity • Expansion Plans: Increase rubber recycling capacity from 6,000 to 16,000 tons by FY'26. • EBITDA Estimates: • Lead: Rs. 16,000-17,000 per ton. • Aluminum: Rs. 18,000-19,000 per ton. • Plastic: Rs. 10,000 per ton. • Steel and Paper: EBITDA margins of 18-20% and 30-35%, respectively.
Conclusion • Growth Confidence: Management expressed confidence in sustaining a 25-30% growth rate by targeting various industries and enhancing product capacities. • Debt Facility: New facility to support CAPEX and working capital for overseas operations.
Gravita India Limited Q3 FY '23 Earnings Conference Call Summary
Financial Performance • Revenue Growth: 42% year-on-year increase to INR 789 crores. • Sales Volume: 34% rise contributing to revenue growth. • Adjusted EBITDA: INR 71 crores, up 31%, with EBITDA margins at 9%. • Profit After Tax (PAT): Grew 28% to INR 50 crores; 65% from overseas operations.
Capacity and Expansion Plans • Current Capacity: Increased to 228,000 metric tons per annum. • Future Target: Aim to reach 425,000 metric tons by 2026. • New Plant: Recycling plant in Togo expected to generate INR 60 crores annually.
Strategic Initiatives • Raw Material Supply: Confidence in maintaining supply despite competition. • Return on Capital Employed (ROCE): Targeting at least 25% in new ventures. • Working Capital Cycle: Goal to reduce from 80 days to 65 days by March 2026.
Capital Expenditure (Capex) • Annual Capex: INR 80 crores for existing operations; INR 200-250 crores for new verticals over the next three years. • Paper Recycling: Estimated capex of INR 75-85 crores for expansion.
Market Insights • Gross Margin: Lower due to fluctuating metal prices; expected volume growth of 2 lakh tons. • Plastic Segment: Temporary decline anticipated to recover with market stabilization. • Aluminum Prices: Expected to maintain INR 18,000-19,000 per ton.
Debt Management • Current Debt: INR 315 crores, with plans to maintain a debt-equity ratio of 0.75 and debt-EBITDA ratio of 1.5.
Competitive Landscape • Domestic vs. Imported Scrap: Higher domestic prices due to GST and unorganized sector influence. • Competitors: Acknowledgment of competitors like Amara Raja and Exide entering recycling.
Future Outlook • Lithium-Ion Battery Recycling: Pilot project initiated; significant market entry expected in 5-7 years. • Asset Turnover: Expected around 7x to 8x for paper recycling. • Sustainability of ROCE: Assurance of asset-light operations and high-turnover opportunities.
Investor Engagement • Q&A Session: Addressed various inquiries regarding strategy, market conditions, and operational efficiencies. • Confidence in Growth: Management expressed optimism about future growth and operational strategies.